TN Budget 2026: TVK gives Tamil Nadu budget a Vetri makeover

CHENNAI: No big-ticket projects nor blockbuster announcements, revival of welfare schemes for rural population announced nearly a decade and half ago, and, much to the chagrin of opposition parties, renaming some of the existing schemes.

The TVK-led government’s maiden budget that was presented on Wednesday (August 5) was an exercise in restraint where repair and fiscal consolidation priority over even poll promises.

Less than two months after it released a White Paper on State’s financial situation, a move to score political points over its rivals, the government would continue on the same path of huge borrowings and sizeable deficit, both of which it justified as part of running a State that is on the rise.

There were indeed new measures, ranging from the populist one-sovereign gold and silk saree for brides (Annan Seer Scheme) to future-focused ones like ‘Arivagam’, touted as India’s first dedicated AI and Innovation city. There were also ones like 200 integrated student hostels with one lakh beds, phased rollout of smart electricity meters, and renewable energy push.

Then there was the renaming drive, from free laptops for college students, skill training scheme, goat rearing scheme for women, housing scheme, etc. that were given the TVK’s favourite prefix, ‘Vetri’.

And then there were complaints of some of the key promises, like enhancing the monthly dole for women to Rs 2,500, not figuring in the budget.

Beyond these were the crucial numbers. Like Rs 1.22 lakh crore, the amount that Tamil Nadu will borrow this financial year, a record high. The deficit has come down marginally from the Budget Estimate that the then DMK government presented just before the Assembly elections.

Briefing reporters after Finance Minister N Marie Wilson presented the Revised Budget, Finance Secretary MA Siddique got to the crux of the matter: “Debt will continue to rise every year. It cannot be reduced even over the next 50 years.”

The State would raise Rs 1.22 lakh crore during 2026-27, and had already borrowed about Rs 21,000 crore in the April-June quarter, he said. But qualifying these astronomical figures, he added, “The important consideration is that borrowings remain within the limits prescribed by the government of India and are backed by the State's repayment capacity.”

Defending the government's borrowing strategy, Siddique said, "Borrowing is not wrong if it creates productive assets and supports development. The only sustainable way to reduce the debt burden is by increasing the State's revenues."

Siddique said the government had adopted a balanced approach that sought to revive the State's finances without disrupting existing welfare programmes. "The State's financial position was under severe stress three months ago. We have taken measures to increase revenue and improve expenditure efficiency. The fiscal situation cannot be corrected in a single year; it will require at least two years," he said.

He, however, reaffirmed the ruling TVK government's commitment to its election promises, including the flagship monthly assistance of Rs 2,500 for women heads of families.

"All the major promises under the 'Vetri Tamizhagam' programme will be implemented. Fiscal consolidation must come first. The Rs 2,500 assistance scheme will be rolled out within a year, while the remaining flagship schemes will be introduced in phases over the coming years," he said.

On the long-pending demand for restoration of the Old Pension Scheme, Siddique said the government had neither accepted nor rejected the proposal. "No decision has been taken. The status quo continues," he said.

The Finance Secretary disclosed that around Rs 7,000 crore in dues from the Union government was yet to be released to Tamil Nadu. He also asserted that no existing welfare scheme had been discontinued despite the difficult fiscal situation.

Responding to criticism over the use of public-private partnerships, Siddique said infrastructure creation through private participation should not be mistaken for privatisation of public services.

"Providing healthcare is the government's responsibility, but constructing hospitals need not necessarily be. PPP enables quality infrastructure to be created at lower cost while public service delivery remains with the government," he said.

He also dismissed concerns over school education spending, noting that the revised allocation of Rs 44,527 crore remained higher than the previous year's actual expenditure despite rationalisation from the Interim Budget, while maintaining that the government's commitment to education and welfare remained intact.